Is the Treasury Department's Home Affordable Foreclosure Alternatives (HAFA) program a complete failure? It was introduced to help borrowers who couldn't qualify for the Home Affordable Modification Program (HEMP) complete a short sale (as well as expedite the process...which is an oxymoron in and of itself; the government helping private enterprise be more efficient, ha!).
Now, after 15 months, the $4.1 Billion program has disbursed $9.5 million and accounted for only 8,541 short sales. To put that in perspective, during that same time frame, nearly 500,000 short sales were completed across the country. Meaning, a whooping 0.01% of short sales were completed through the HAFA program.
Why such little participation?
- Lender Lack of Participation: Lenders are not allowed to collect on loan balances when short sales are handled through the HAFA program.
- Borrower Lack of Participation: In order to qualify, borrowers must have lived in their home for the past 12 months (no investment properties), have documented and qualifying financial hardship (no strategic defaults), a first mortgage less than $729,750 obtained before January 1, 2009 (sorry California) as well as a host of other requirements.
Ironically, both Lenders and Borrowers stand to gain financially from HAFA participation. Lenders receive $1,500 for participation in the program and borrowers can receive up to $3,000. A testament to it's effectiveness...it's having trouble paying people to participate!
HAFA is due to expire at the end of next year. Director of policy Laurie Maggiano says the "complex machine" of HAFA will take time to change, but that change is finally, "beginning to happen".
What do you think? Does HAFA need policy reform, or should it be canceled all together?
Is this a good use of our tax dollars? Paying $4,500 for each short sale transaction?
I did a short sale on my out of state rental property. Now I am going to do a short sale on my personal residence through this program HAFA. Bank of America will pay me $3,000. They will also pay off my equity line of credit for $3,000. I owe $50,000 on this loan.
Let us know how it goes. Good luck!
Some of us are not so lucky. We can afford our mortgage, but due to job difficulties had to take a job 540 some miles from home that we lived in for over 10 years. Due to healh related issues at a very young age with a family of four a second mortgage was taken out. Later we turned it back to one. We now live with my parents in hoping to sell the home that is now worth less then we paid for it over ten years ago. With our financial hardship of both parents on separte occasions needing heart surgery due to congenital heart defects and now having to move due to job related issues we are stuck in a very unfortunate situation. We are still paying our mortgage at a distance. We will have our pristene credit ruined now due to a shortsale and may never be able to buy again. Thank you government for lending to people who could not pay the mortgages causing the balloon of the housing market and then the fall out. Our home should not be worth less then what we paid for it over ten years ago even with our financial harship due to heart surgery. Without the fall out we would not be selling a short sale, but just a regular sale of a home worth what it should be worth. We are good people stuck in a very unfortunate situation. If anyone knows of a happy light with some ray of good please let us know.
I agree with Ron, let the program expire. Lenders already charge to much for closing fee’s, why should our tax dollars go to the lenders. The whole housing crises is caused by jacking up the prices on homes that buyers can’t afford, but making it easy to get into, only to find out later the new owner can’t afford the mortgage payments.
Sure, there might be higher equity in the homes, but people have to live with in their means . If you have the money’ that is fine to afford a $150,000 and higher home, but if you don’t have the money coming in to buy these higher price homes to live in then it does not make any sense to have these type of programs. Let the program expire.
Most people I’ve talked with in the White Plains, NY, lower Westchester County area are saying they don’t know anything about the Home Affordable Foreclosure Alternatives (HAFA) program. This is concerning me alot.
They are doing NOTHING about their financial situation that can lead to losing their home and becoming homeless.
They seem emotionally FROZEN in not knowing what to do about a short sale or foreclosure procedure. What STRESS! I try to calming talk with them about their situation to at least start the process to help them save themselves.
It’s difficult to help them all. The only people you can truly help are those that are seeking out help. For all of those who refuse assistance, it’s difficult to convince them. Over the years, we have found it best to only focus time on those people who truly want our help. Sadly, we don’t have the time to convince the others of the value of our assistance. Hopefully this little tip may help you become mroe successful in the short sale business.
As with most government programs,they rarely work. The HAFA program makes you list your property for at least 120 days before you can sell it. I don’t think its worth 3000 dollars to have your property on the market for that length of time and making Mortgage payments that are probably higher then that if there is a possiblity of selling your property is less time.
Great point Donna.
I bought a house in Oregon for $540k, I owe $480k but it is worth now about $380-$420k, maybe less
The loan has a baloon in 3 years, but even with great credit scores and income (never late on a payment) I wont be able to refinance because of the “underwater situation”.
When the time comes for the ballon, I won’t be able to comply… I feel like I was robbed, the lender doesn’t care about the situation, this is FRAUD. I was sold a 10 yr arm with a ballon… thinking in 10 years it will appreciate… so the refinance can take place. What to do now? I have friends living free (bank of america) for the last 4 yrs while I dilligently pay my mortgage. My Lender is Suntrust, I they really work fast in repossesiong the house (8 months)
Is there a program so I can refinance my underwater property> should the lender help?
Hans, your situation is difficult because it sounds like you can afford the payments. Short refinances and principal reduction loan modifications are becoming an option for borrowers (consult an attorney to see what options you may have available) but right now, only borrowers with a verifiable hardship can qualify. And you’re also right that some borrowers who stopped making payments years ago are still living in their homes for free due to difficulities loan servicers are having foreclosing, especially BoA. You’re not alone. It’s troubling. This is where “Strategic Defaults” have been cropping up, especially in California. Borrowers who can afford their payments are simply suspending future payments, full well knowing that it will damage their credit, but weighing their options and considering living for free for a year or so, better than paying and maintaining their credit. But Banks are not happy with that sort of behavior and it is creating more consequences than these strategic default participants realize. Again, consult an attorney as to your options.
Let the program expire. Lets speed up the foreclosure process so that the housing market can finally find bottom.
Sorry to those of you that like living in financed home for free. If you read the note it is a promise to pay. Not a promise to modify, skip payment or any other government program…